Basics of Credit
The 3 C's
Capacity: Your financial ability to pay back a loan
Character: Sense of financial responsibility; Dependability
Credit Cards: What you need to know
● What is a credit card?
A plastic card issued by a bank, business, etc. for the purchase of goods or services on credit.
● Where can you use credit cards?
At any store pretty much or any business where you can build credit
● What are the benefits and costs of using credit cards?
Credit allows consumers to purchase more goods, creating more jobs for people to make those goods. The costs of using credit cards are if you go over your credit limit, if you make a late payment, and penalty fees.
You must use the following vocabulary words in this section:
● Annual Fees - A yearly fee charged by credit grantors for the privilege of using a credit card
● Credit Limit - the maximum amount of credit that a financial institution or other lender will extend to a debtor for a particular line of credit
● Interest Rate (APR) - amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets
● Penalty Fees - Fees charged if you violate the terms of your cardholder agreement or other requirements related to your account
● Over-the-limit fee - For each month that their balance exceeds their loan limit, borrowers are charged this type of fee